News: Warning of insurance hike

Building Safety Bill amendments prompt insurance hike fears

Construction bodies warn that extension of defects liability could cripple small firms

A chorus of construction industry

bodies have warned that proposed amendments to the Building Safety Bill could send the cost of professional indemnity insurance spiralling out of the reach of some companies.

The Construction Industry Council (CIC) warned last month that late government amendments to the Building Safety Bill, including plans to extend defects liability from 15 years to 30 years are “unworkable” and could force professionals to leave the sector. The comments were part of CIC’s evidence to the Levelling Up, Housing and Communities Committee inquiry which is scrutinising housing secretary Michael Gove’s approach to fixing the building safety crisis.

Now the CIC has been joined by several other industry bodies, including the Association for Project Safety (APS), the Building Engineering Services Association (BESA) and the Chartered Institute of Architectural Technologists (CIAT), who have all warned that the bill could create insurance woes for small businesses (see box).

The Building Safety Bill is currently making its way through the House of Lords. It is expected to become law at some point between the spring and summer of this year. ● The construction industry’s Building Safety Bill concerns

● Construction

Industry Council

CIC said that the “huge increase in level and extent of liability” under the new plans could force SMEs out of housing development, with the insurance sector potentially concluding that it should walk away from construction.

CIC chief executive Graham Watts said: “These proposals could… [make] it impossible for companies and people to continue in the sector.

“It is vital these very late amendments be given greater scrutiny to allow for the passage of a bill that provides great recompense for consumers but ensures the viability of the construction sector and its ability to help deliver on the levelling-up agenda.”

● Chartered Institute of

Architectural Technologists

A statement from CIAT said: “The proposal to extend liability periods is unrealistic, unworkable and unachievable, and has the danger of potentially persecuting innocent parties without the means to defend themselves. Imposing a retroactive period of 30 years is a reactive addition to the Building Safety Bill and is not the solution.

“The narrative from government is implying that it is aiming these measures at large manufacturers, contractors, and developers. In reality [it will] affect those sole practitioners and SMEs which are the majority in the professional services sector. CIAT would urge the government to continue with its original commitment to fund the remedial works as promised and aim any sanctions or pursue recovery at the right parties.”

● Association for

Project Safety

APS president Jonathan Moulam said: “The Building Safety Bill is a wasted opportunity to make the built environment safer for everyone. The concentration on structural fire risk replays a disaster that should never have happened without looking forward to how safety can be improved more generally.

“The bill as it stands creates dangers of its own and is likely to make homes less affordable while pushing small firms out of business. Potential costs could make the existing skills crisis worse.”

● Building Engineering

Services Association

BESA chief executive David Frise said: “We cannot ignore commercial realities and our members are already seeing a considerable rise in the cost of PI insurance as insurers seek to insulate themselves from the risks – perceived or otherwise.”

BESA said a compromise could be found, lying in the competence framework that the government is proposing to underpin the bill. It said this would “increase scrutiny of the professional credentials of firms bidding for work and place increased responsibilities on clients to only appoint competent firms”.